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The Trump administration said Saturday it's freezing payments under an "Obamacare" program that protects insurers with sicker patients from financial losses, a move expected to add to premium increases next year.
In a weekend announcement, the Centers for Medicare and Medicaid Services said the administration is acting because of conflicting court ruling in lawsuits filed by some smaller insurers who question whether they are being fairly treated under the program.
The so-called "risk adjustment" program takes payments from insurers with healthier customers and redistributes that money to companies with sicker enrollees. Payments for 2017 are $10.4 billion. No taxpayer subsidies are involved.
The idea behind the program is to remove the financial incentive for insurers to "cherry pick" healthier customers. The government uses a similar approach with Medicare private insurance plans and the Medicare prescription drug benefit.
Major insurer groups said on Saturday, 7 July, the administration's action interferes with a program that's working well.
The Blue Cross Blue Shield Association, whose members are a mainstay of Affordable Care Act coverage said it was "extremely disappointed" with the administration's action.
Serota noted that the payments are required by law, and said he believes the administration has the legal authority to continue making them despite the court cases. He warned of "turmoil" as insurers finalize their rates for 2019.
America's Health Insurance Plans, the main health insurance industry trade group, said in a statement that it is "very discouraged" by the Trump administration's decision to freeze payments.
"Costs for taxpayers will rise as the federal government spends more on premium subsidies," the group said.
The administration argued in its announcement that its hands were tied by conflicting court rulings in New Mexico and Massachusetts.
Medicare and Medicaid Administrator Seema Verma said the Trump administration was disappointed by a New Mexico court ruling that questioned the workings of the risk program for insurers.
The administration "has asked the court to reconsider its ruling, and hopes for a prompt resolution that allows (the government) to prevent more adverse impacts on Americans who receive their insurance in the individual and small group markets," she said.
More than 10 million people currently buy individual health insurance plans through HealthCare.gov and state insurance marketplaces. The vast majority of those customers receive taxpayer subsidies under the Obama-era health law and would be shielded from premium increases next year.
The latest "Obamacare" flare-up does not affect most people with employer coverage.
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